Educerie · IB Diploma · Economics
Unit 1 — Topic test
Paper 1 style · 20 marks · 30 minutes
Answer all questions. Diagrams must be fully labelled. Use real-world examples where you can.
1. (a) Define the term opportunity cost. [2]
(b) A government with a fixed budget can build a hospital, a school or a road, which it values in that order. It builds the hospital. State the opportunity cost of this decision, and explain your answer. [2]
2. (a) List the four factors of production and state the return to each. [2]
(b) Explain, using a diagram, why a production possibilities curve is normally drawn concave to the origin. [4]
(c) Distinguish between a movement along a PPC and an outward shift of it. [2]
3. Distinguish between positive and normative statements, using an example of each. [4]
4. Evaluate the view that a free-market economy is the most effective way to allocate scarce resources. [4]
Total: 20 marks
Command terms in this test. Question 4 says evaluate, so both sides and a supported judgement are required — a one-sided answer cannot reach full marks. Question 2(b) says explain, using a diagram, so the diagram is assessed and must be fully labelled. Questions 2(c) and 3 say distinguish, which must be written as a comparison.
Educerie · original questions written against the published IB syllabus structure for Economics Unit 1, first assessment 2022. Last reviewed 5 September 2026.